Off Label Marketing & The False Claims Act if No Exact Evidence

Can you bring a False Claims Act case based on a
drug company's off-label marketing, even if you don't have evidence
that a particular doctor wrote a prescription to a Medicare or
Medicaid patient based on the drug company's marketing?

Many drug reps are very disturbed to realize that their company
is blatantly pushing a drug for an off-label use - and largely
depending on the sales reps to participate in this activity.
This is clearly impermissible conduct, even though doctors are
permitted to prescribe drugs for off-label uses. Because the
doctor could have chosen to write a prescription based on her own
reading, rather than the drug company's sales efforts, it is
possible that the drug company didn't "cause" any given false
claim.

Often, a drug rep will know about the intense marketing
that a drug company is doing, because the drugs reps are primary
players in the illegal marketing. They have details about the
way in which the company is recruiting physicians to promote the
drug, the "sponsored" studies of new usages, the bonuses the sales
reps are given to increase sales, the identification of doctors in
various fields who might be receptive to pitches for off-label
uses. What they may not know is any particular doctor who
actually wrote prescriptions for an off-label use, for a Medicaid
or Medicare patient, based on the off-label pitch that was
made.

When faced with a False Claims Act lawsuit alleging that
its off-label marketing caused the submission of false claims to
the government, the drug company will argue that the case must be
dismissed because there is no evidence that its off-label marketing
can be tied to any particular claim for reimbursement to a
government healthcare program. Obviously, the company will
raise numerous other arguments also, such as whether an off-label
usage would have been reimbursed, whether the marketing activities
are protected by the First Amendment as commercial speech, and many
other points. This discussion, however, is only addressing
the argument about whether the off-label marketing caused the
submission of any false claims.

Since the drug company does not actually
seek reimbursement from the federal healthcare programs, and thus
doesn't directly submit a claim to the government, the portion of
the False Claims Act that can be applied is the section that holds
someone liable for "causing" the submission of a false
claim.

The argument made by a whistleblower or the government is
that a drug company that illegally markets its drugs for off-label
uses knows - and intends - that physicians will be influenced to
prescribe the drug for off-label uses and knows, at least in a
statistical sense, that some of the prescriptions will be paid for
by a government healthcare program such as Medicare or
Medicaid. If the off-label use is for a medical condition
that is particularly prevalent among the elderly, for example, such
as a drug being used off-label to treat patients with Alzheimer's,
then it is virtually inconceivable that no claims for the off-label
usage would be submitted to Medicare. Often, a drug company
will even have projected sales that identify government healthcare
programs as likely payors. Given the high percentage of
prescriptions that are reimbursed by a government healthcare
program - now about 37%,
http://www.businessweek.com/articles/2014-07-10/insurers-big-pharma-fight-over-who-pays-for-pricey-drugs
-- it is a fair assumption that almost any usage will result
in some claims submitted to the federal government for
payment.

But the drug companies have argued that those assumptions
are not sufficient to allege causation - that they caused
physicians to submit false claims to a federal healthcare
program. Instead, they argue that any given prescription
could have been written based on a physician's independent judgment
or that the inability of the relator or government to allege at
least some specific claims that can be tied back to the company
means that the allegations must be dismissed. In a recent
decision by a federal district court in California, the court
soundly rejected those arguments, relying in part on a persuasive
Statement of Interest submitted by the United States.

InU.S. ex rel. Brown v. Celgene
Corp., 2014 WL 3605896 (C.D. Cal. July
10, 2014), the whistleblower alleged that Celgene had been
promoting its Thalomid and Revlimid drugs for oncologic uses that
they were not approved for.

By way of background, Thalomid is the branded version of
the pharmaceutical thalidomide, which was banned in the United
States in the 1960s in connection with horrific birth
defects. Revlimid is a derivative of Thalomid. In 1998,
the FDA approved Thalomid for a very narrow indication, treatment
of a skin disease associated with leprosy. An additional
indication was added in 2006, for a specific plasma cell cancer,
but only in combination with another drug and with a strict black
box warning of the risk of birth defects and other dangerous side
effects. Revlimid was approved in 2005 for a fairly uncommon
subtype of the blood disorder myelodysplastic syndrome. These
were very expensive drugs, costing between $5,000 - $13,000 per
month for their approved uses. Celgene's sales of over $20
billion for the two drugs since 2006 demonstrates huge off-label
sales, since the very limited on-label indications could not
generate anywhere near that volume, even with the high cost per
patient.

Although the United States did not join the
whistleblower's lawsuit, it submitted what is called a "Statement
of Interest," to inform the Court of the government's position on
certain issues. The United States disputed Celgene's
contention that, to establish an FCA claim, a whistleblower must
provide direct evidence that a doctor's off-label drug
prescriptions were caused by a company's drug marketing.
Instead, the government wrote, "Causation can be established by
circumstantial evidence…The critical issue with respect to
causation is whether it is reasonably foreseeable that a fraudulent
scheme would result in false or fraudulent claims being
submitted." (U.S. Statement of Interest 13). As
the Government explained, "a defendant drug manufacturer
could reasonably foresee that a comprehensive marketing scheme
involving [a] large number of salespeople furnishing large numbers
of physicians with information about off-label use of a drug in a
manner which is not a medically accepted indication could cause
providers to prescribe the drug for those off-label
indications."Id.at 14).

The court reiterated the accepted notion that causation
under the FCA follows general principles of tort causation, often
referred to as a substantial factor test. "Under these
principles, Celgene may be liable for false claims submitted by
others if its conduct was a substantial factor in bringing about
the false claims and such claims were a foreseeable and natural
consequence of its conduct." 2014 WL 3605896 at *8. As
the court explained, "[t]he causal chain is straightforward: (1)
Celgene allegedly fraudulently promoted Thalomid and Revlimid for
non-reimbursable, off-label uses to physicians, (2) this off-label
marketing caused physicians to write off-label prescriptions, and
(3) many of these non-reimbursable prescriptions were submitted to
government payors for reimbursement."Id."Finally, given that "a large percentage of Revlimid and
Thalomid prescriptions are paid for by Medicare, Celgene could …
reasonably foresee that these off-label prescriptions would result
in false claims for reimbursement."Id.See also id. at *9 (noting plaintiff's allegations that
Celgene itself estimated that the government paid for the majority
of Talomid and Revlimid prescriptions and that Celgene targeted
government payors because of the drugs' high costs).
The court expressly rejected Celgene's argument that
physicians might have simply exercised their independent judgment,
noting that plaintiff had specifically alleged that Celgene had
manipulated physicians' judgment with its misleading studies and
articles.Id.at 8.

The question remains, however, how courts will
deal with this issue at trial, particularly with regard to showing
damages.

Celgene left this open: "[r]ather than
showing a lack of proximate causation, [Celgene's] argument
presents a question ... regarding the total number of prescriptions
that were attributable to [Celgene's] actions." 2014 WL
3605896 at *8. See also In re Neurontin Mktg. &
Sales Prac. Litig., 712 F.3d 21, 39 (1st Cir.2013)(question
of damages); Strom ex rel. US v. Scios, Inc., 676 F. Supp. 2d 884
(N.D. Cal. 2009)(noting that plaintiff clearly bears burden of
proof as to damages and "there may indeed be factual disputes as to
which claims, if any, were the result of Defendants' fraudulent
activity"). While many off-label marketing cases have been
settled, often for very substantial amounts, there is no clear law
addressing how to approach damages. Presumably this will be
dealt with in a manner that allows statistical proof of damages, as
was recently applied in a different context in another case.
See United States ex rel. Martin, et al., v. Life Care Centers of
America, Inc., No. 1:08-cv-251, Order (E.D.Tn. Sept. 29,
2014)(extensive discussion of how various elements of False Claims
Act claims can be satisfied through statistical sampling); see also
United States v. Cabrera-Diaz, 106 F. Supp. 2d 234,
240 (D.P.R. 2000) (providing an overview of federal circuit courts
that have permitted statistical sampling in this context);
United States v. Fadul, 2013 WL 781614, at *14 (D. Md.
Feb. 28, 2013) ("Courts have routinely endorsed sampling and
extrapolation as a viable method of proving damages in cases
involving Medicare and Medicaid overpayments where a claim-by-claim
review is not practical").

The bottom line? Drug reps should
continue to actively report the off-label marketing activities of
drug companies, and seek to enforce the law through FCA
lawsuits. The causation issue, at least, will be easier to
establish based on the Celgene decision.

Contact Us

If you have discovered evidence of government fraud,
contact an experienced False Claims Act attorney before blowing the
whistle. You may be entitled to a substantial reward and the legal
protections afforded to whistleblowers under state and federal
laws. The attorneys of Berger & Montague are nationally
recognized experts in Whistleblower/Qui Tam actions with over a
decade of experience pursuing these complex fraud cases. For more
information or to schedule your confidential consultation, use the
form on this page or call us at 1-800-424-6690.